Medical fraud, specifically fraud related to Medicare and Medicaid, is prevalent in the United States, costing the government tens of billions of dollars a year. Though medical fraud is practiced on a wide scale, only a fraction of the criminals involved are ever apprehended, and out of those that are caught, only a fraction of the stolen money is ever recovered.
One major source of medical fraud is the use of deceased person's medical information to file false claims. This type of fraud has two major branches, one where the deceased is a patient and the other where the deceased is a medical physician. When a criminal impersonates a patient, the criminal typically files false claims relating to medical bills, such as doctor's visits and prescriptions, and is reimbursed by the government. When a criminal impersonates a physician or other healthcare provider, the criminal files false claims relating to services preformed. Currently, insufficient procedures and monitoring are in place to verify the information on these forms before payment is issued.
The government utilizes the Social Security Administration to keep track of deceased individuals in what is termed the Death Master File (DMF). Deaths, however, often go unreported, and absence of a person's name in the DMF is in no way an indication that a person is still alive. No law requires a death to be reported to the Social Security Administration, and family members of the deceased often do not know that deaths should be reported or do not understand the procedures required to do so, especially if the decedent was not of age to receive Social Security benefits. Even if a death is reported, it takes a long time to enter the DMF.
Another major source of medical fraud is related to the sale of durable medical equipment. Durable medical equipment may include items which are used to increase the quality of life of a patient, for example in the patient's home. Durable medical equipment is often covered by insurance companies, Medicare, and/or Medicaid. A supplier of durable medical equipment may provide goods to a patient and then receive reimbursement from an insurance company, Medicare, and/or Medicaid. Fraud may be introduced where a supplier submits multiple equipment reimbursements for a single patient or submits reimbursements for patients that do not exist. Suppliers may function as partially legitimate businesses or fake suppliers may be established by criminals to operate without ever actually providing goods or services to patients. Criminals may also fraudulently obtain DME and resell them on secondary markets.
A majority of the government's efforts to fight fraud are based on catching and prosecuting criminals after the fact. These efforts are both inefficient and ineffective at recovering money that is already stolen. By the time criminals are caught, the money is often hidden or spent. Thus, there remains a need to prevent such crimes before they occur.